Chamber and committees

I come back to my previous answer, which is that, structurally, that was not committed to in the initial budget allocation eight months ago. This year, we have looked to ScotWind to provide the necessary flexibility to fund that, and I hope that, collectively, we will be able to allocate funding to that from the outset in the 2027-28 budget. If that is not the case, we will have to look at how we can allocate funding to it in year.

The remaining ScotWind budget is £807 million. Am I correct, Scott?

Thank you for having us here today.

Persistent high inflation and lower economic growth across the United Kingdom and, of course, Scotland, the continued cost of living crisis and wider geopolitical events mean that careful consideration has been given to balancing the budget this year.

The reality is that Scotland’s public finances remain under immense pressure—I and Cabinet colleagues have made no secret of that in our appearances before the committee over the past financial year—and the funding that we receive from the UK Government is being squeezed year on year. At the same time, demand for public services continues to grow—that is evident right across the numbers that we will investigate today.

Our prudent management of the 2025-26 financial year has allowed us to carry forward funding through the Scotland reserve, which, as was transparently set out in the spring budget revision and the provisional outturn, is being utilised to support 2026-27 budget and spending plans. Barnett consequentials also allow us to provide additional budget cover across portfolios to meet emerging pressures in the autumn budget revision.

The autumn budget revision sets out the funding changes and amendments that have been made to budgets since the 2026-27 Scottish budget was set. The revision deploys almost £800 million of additional resource funding to support our public services. The net funding changes increase the budget by around £709 million. Those changes include the provision of £567 million to health to support services; £85 million to education, culture and Gaelic; and £35 million to justice.

All the consequential funding that has been received from the UK Government in respect of special educational needs and disabilities is allocated as part of the autumn budget revision. However, given the likelihood of negative consequentials linked to the UK defence allocation that will be made in just a couple of hours’ time, we have a contingency plan, which I am sure that we will discuss as the hour goes on.

The technical, Whitehall and internal transfers are presented in the document in the usual way. The supporting document to the autumn budget revision and the finance update that my team has prepared provide further background on the net changes, as well as updates on information that the committee requested.

Convener, I am happy to answer any questions that you or your committee may have.

As public finance minister, with a portfolio that includes community empowerment and input into public sector reform and how we structure local governance, my answer is yes, I would like to see more baselining take place, but I am one colleague around that table, and it is about how we get there as a collective.

It is a fair question, and we can come back to the committee on that. It goes back to the first question, which was raised by Ms Schmulian and which was on the national performance framework. It is about tracking across between what are significant sums and outcomes. The term “key performance indicators” is a very private sector one, but there are indicators that we can track. We can give a commitment to come back to the committee on that.

We give autonomy to the health boards so that they can react to what they are seeing, in terms of demand-led services in their areas. That is right and proper, given that they are at the coalface and seeing that. As part of public sector reform, we are looking to take the number down significantly—to two—with bespoke solutions for the islands, and colleagues from the health portfolio would be able to come and give greater clarity on the A and E perspective.

As I said at the beginning, it is about transferring this very reactive perspective that we have across public service into prevention, so that accident and emergency is reserved for accident and emergency cases. One of the commitments that has been delivered on by this Government, in several of our constituencies, is the drop-in general practitioner services, which are taking pressure off accident and emergency units across the country. We are seeing a greater roll-out of those clinics, from Shetland down into the Borders regions.

We continue to try to find creative solutions to the undoubted pressures on accident and emergency across the country, and the GP walk-in clinics are one of those measures.

I will come in off the back of that. I would like to be in a situation in which we did not have to use ScotWind funds and we did not have to allocate all the SEND consequentials in this year alone. I would like to be in a position in which we did not have to scrape the barrel in looking at different backstop options. However, that is not the fiscal reality that we find ourselves in.

As Scott Mackay said, we have had the backstop of ScotWind over the past four years as a safety net, and we have had to use it once. It is my clear desire to ensure that, this year, we look at every other backstop option that is available to us and turn over every stone. ScotWind is essentially our wealth fund, and I do not want to be in a situation in which we must consistently look at it as a safety net.

As I outlined clearly to Ms Stafford, there are pressures that will continue in balancing the budget for the next three years. ScotWind gives us breathing space, but we are able to claw that back year on year, and we have had to use it in only one year.

10:15

According to the figures that I have seen, it is not the case that only £60 million of that funding remains unallocated.

You have asked a number of questions, to which there are a number of answers. Please forgive me as I work through them.

The £85 million of capital funding that is being returned from the economy, tourism and transport portfolio relates primarily to a transfer back to central Government of £50 million from Caledonian Maritime Assets Ltd. CMAL operated at arm’s length from Government and was defined as a public body in its own right. As such, it had the ability to retain reserves. However, the Office for National Statistics reclassified CMAL, which I think happened last year—forgive me, I was not around at the time, but I believe that it was as recently as that. The reclassification has brought CMAL closer to the Scottish Government and has meant that it cannot keep its own reserve. Its reserve was therefore absorbed into a Scottish Government capacity reserve.

You will be aware that our reserve is limited year on year. This year, it stands at about £730 million. Next year, the forecast is that, allowing for inflation, it will stand at about £765 million.

In addition to the amount from CMAL, there is £35 million of funding for active travel, rail infrastructure and low-carbon transport.

In a couple of hours, we expect a negative Barnett consequential due to increased defence spending at the UK level. We expect that increase to offset about minus £66 million for us. Therefore, we are holding that £85 million back as a safety measure.

I guess that, for the past few minutes, I have been trying to explain the contingency and safety net that we are trying to bake into our figures and our budget as we look forward to the coming years. We are retaining the capital reserve as a safety net and contingency for the capital reduction that will occur as a result of the consequentials that come from defence spending.

I understand the context of the committee’s interest in the costs. It is important that I put on the record that those are legitimate questions to ask. Each of the ongoing public inquiries is rightly independent of Government oversight. The inquiries have the necessary independence and third-party expertise to operate with the flexibility that is required to provide a fair and robust assessment of the situation.

Many of the inquiries are sensitive and delicate by nature. We would not like to be seen as capping or applying rigidity to those processes, because it is fair and right to preserve the inquiries’ independent nature. However, the inquiries come back with quarterly reports on costs and related stats, which I support.

I understand. Thank you. It is worth taking a step back. We are in the throes of creating the largest change in our public services, including our local government and how we apply that across the country, since 1999. It is a massive change, and it is needed for our public services across the board to become more preventative, service focused, front loaded and joined up for education, health and justice—of which the police are a part. It is about looking at how we front load some of that spend and preventative cost in order to have the public services that, rightly, people expect of the Government and the country.